1. Field of the Invention
This invention relates to a system for enabling an individual to automatically track specific expense related items, income, assets, and/or liabilities, for budgetary or tax purposes.
2. Description of Related Art
Numerous systems have been developed to automate financial record keeping for the purpose of tracking expense related items, income, assets, and/or liabilities, for budgetary or tax purposes. Nevertheless, although attractive in theory, most conventional systems are impractical for individual use. An individual in most cases cannot afford to hire a bookkeeper to gather the necessary data, and even though a number of commercial accounting programs are available which can be run by an individual with no special training on a personal home computer, most individuals do not have the time or desire to run such programs, which inevitably require the individual to manually enter the necessary data into the computer each time a transaction, i.e., the writing of a check or deposit slip, is carried out, or to scan prerecorded forms as described in U.S. Pat. No. 5,117,356 (Marks), which must be specially prepared and compared with the original checks or deposit slips to ensure accuracy.
Numerous individuals have finances which would benefit from automization, especially for budget planning or tax purposes, but the automization is useless if it requires generation of additional forms, manual verification and/or manual data entry. The simplest investments, such as a rental property or the purchase of ordinary common stocks, can generate an overwhelming amount of transaction data. Nevertheless, even the most user-friendly home accounting programs tend to end up on the shelf when the user discovers the effort needed to enter transaction data every time a cancelled check is returned or a deposit is made. Even where the bank makes available electronic or optically scannable records which can be entered in the home accounting program, the time necessary to verify the data often negates the time saved by automated entry. Despite the best of intentions, the cancelled checks and other documents concerning the transaction thus often end up in a "shoe box" until they are needed, for example, for taxes, or for an unforeseen crisis such as a divorce or bankruptcy, by which time the individual's records can at best be only partially reconstructed and at great difficulty. While such a possibility should motivate individuals to keep better records, especially in view of the currently available technology for that purpose, it simply does not.
The solution, as the inventor has discovered, lies in the use of the transaction documents themselves, usually in the form of checks or deposit slips, as the medium by which information on the transaction is gathered. However, even though checks already carry a variety of information, no system currently exists for utilizing the information-carrying potential of checks for the purposes envisioned by the inventor. Instead, as will be explained below, while it is common for banks to use information on the checks for their own accounting purposes, or for the payee of a cheek to gather data for its own benefit, the payor of the check still has to resort to pre-electronic age data collection systems.
A check or bank draft is a type of negotiable instrument which enables an individual bank account holder to order the bank to pay a third party the amount written upon the face of the check upon demand. Most checks or bank drafts are printed by an agent of the bank which holds the funds to be used in the transaction. When the account holder or "payor" transfers the pre-printed check as payment for a transaction, the payee presents the negotiable instrument to the payor's bank, either directly or via its own bank, and receives payment based on the amount written on the face of the check, after which the check is cancelled so that it cannot be used again. The payor's bank then uses a standard set of procedures to debit the payor's account, after which the payor is generally given the option of receiving the cancelled check.
A negotiable instrument must inherently carry certain information, generally provided by the payor, including the identity of the payee and payor, and the amount of the transaction, in order to enable the bank to carry out the transfer of funds as payment for the transaction. The negotiable instrument can be written on any medium, so long as it is tangible, but the most common medium is of course paper. A number of U.S. patents are concerned with processes for automizing the utilization of this information to facilitate payment, examples of which include U.S. Pat. No. 4,667,985 (Leonard et al.), and U.S. Pat. No. 4,974,878 (Josephson), all of which are concerned with machine reading of information provided by the payor and carried by the check for the purposes of facilitating the transaction. Another example is found in U.S. Pat. No. 4,864,111 (Cabili), in which the payor is asked to manually convert the amount of the check to machine readable form by filling in boxes below the amount, in order to facilitate automated processing of the check by the bank.
A recent trend has been for businesses to accumulate information concerning individual spending patterns, generally by tracking credit or debit card purchases, and creating a database on the individual. An extension of this concept has been to use checks as the medium for automatically transferring and collecting such information. It has, for example, been proposed in U.S. Pat. No. 4,974,878 (Josephson) to combine the payment coupons which normally accompany certain types of commercial transactions with the actual negotiable instrument or check, thus eliminating the need to process separately the two documents and permitting the negotiable instrument to serve as the medium of information transfer between the payor and the payee, not only of information necessary to facilitate payment but also of additional information. Conversely, a system was proposed in U.S. Pat. No. 4,405,157 (Bennett) in which an individual payee is induced to provide information to the payor by using a negotiable instrument as a reward and, subsequent to cashing or deposit by the payee, as the medium of information exchange. Under this system, the individual is sent a check on the back of which is printed a survey to be filled out by the individual, the printed survey form being returned to the survey firm as a cancelled check.
Despite similarities between the present invention and the above proposed systems, however, each differs fundamentally from the invention in that none of the proposed systems is solely for the benefit of an individual (or payor), utilizing information provided by the individual (or payor). The system disclosed in U.S. Pat. No. 4,974,878 (Josephson) uses information provided by the payor for the payee's benefit, while the system of U.S. Pat. No. 4,405,157 (Bennett) uses information provided by the payee for the payor's benefit, and the system of U.S. Pat. No. 4,864,111 (Cabili) uses information provided by the payor for the bank's benefit. Therefore, none of the above systems can be used by a payor (or, according to one aspect of the invention, a depositor) to automatically track information about the payor (or depositor) for the benefit of the payor (or depositor).
One system which does use information provided by the payor for the benefit of the payor is, of course, the memo line at the bottom left hand corner of the check. In fact, a variation of this age-old system, in which the memo space was replaced by boxes to be filled in with category numbers, was actually patented (U.S. Pat. No. 3,980,323 (Boyreau)). However, even the Boyreau patent did not suggest the overall concept of using information provided by the payor to help automate the payor's own record keeping.
The present invention lies in the realization that such a transfer of information--from the payor to the payor using checks or deposit slips as the medium of transfer--can be used to avoid the need for an individual to manually keep a separate set of books or to manually enter data in an automated accounting program for the purpose of tracking specific expense related items, income, assets, and/or liabilities. Instead, the act of payment itself serves as the means by which data is collected and made available for automated processing for the payor's benefit, with the transaction medium doubling as the medium by which data is collected for subsequent automated processing and/or storage.